TALLAHASSEE – Associated Industries of Florida (AIF) today released two independent peer reviews of the Everglades Foundation Economic Report, which discredit the study’s conclusions and methodologies. Although the Foundation's October 2010 report was taken at face value and widely reported on, economic and hydrologic expert reviews commissioned by AIF reveal the Everglades Foundation report grossly over-stated the economic benefits of Everglades restoration. Using realistic economic methodologies and hydrologic realities, the purported benefits do not reach the minimum $46.5 billion stated in the report and will not even cover the $11.5 billion needed to implement the Comprehensive Everglades Restoration Plan (CERP).

“This report is nothing more than wishful thinking with no credible basis for the claims made by the Foundation,” said Barney Bishop III, president and CEO of AIF. “It is impossible to support the Foundation’s assertion that the state will see $4 for every $1 invested in Everglades restoration. Further, it is impossible to even prove the economic benefits will ever cover the costs of the Federal Everglades Restoration Plan.”

“The authors of this study have actually stated at the end of the report that ‘…our work need not be perfect in order to be useful and acceptable’ and ‘…while readers may criticize or disagree with our assumptions and techniques here, any such complaints will fall on deaf ears unless a superior alternative is proposed.’ Well, we have proposed superior alternatives and more appropriate measurements in our reviews. And, they tell a different story than what the Everglades Foundation would have us believe,” added Bishop.

Performing the hydrologic expert review was Paul Stout, Ph.D., P.G., a Principal Hydrogeologist and co-founder of JLA Geosciences, Inc., a firm specializing in water resources. The economic review was conducted by Stefan Norrbin, Ph.D., a Professor of Economics and the Director of the Applied Master’s program in Economics at Florida State University.

“In many instances, the Everglades Foundation study conducted by Mather Economics used assumptions and models that are not plausible to estimate the expected outcomes of Everglades restoration,” said Dr. Norrbin. “Approaching this with alternative assumptions and more reasonable and conservative modeling techniques paints a quite different picture and one with considerably less economic gains in terms of revenue generated and jobs created.”

The experts’ reviews include the following conclusions:

The $13 billion in “groundwater purification” benefits claimed by the Foundation Report are not supported by the data. Many of the counties to which the Foundation Report assigned fiscal benefits are far removed from any restoration projects and obtain their water from other sources, such as the Floridan Aquifer, not affected by Everglades restoration. For example, the report claims Orange County will receive more than $1 billion in benefits to its potable water treatment system when there are no restoration projects that in any way can affect the water used by the utilities in that county.

The claim that raw water supplies will become more saline is based on the complete misuse of the groundwater quality data collected by the South Florida Water Management District (SFWMD). The 6,200 data points relied on by the Foundation are a hodge-podge of samples from numerous, disparate sources that cannot be combined for a single sweeping analysis.

The Foundation’s claims regarding benefits to South Florida housing values are based on a single study of a small community in Maryland. The results of the Maryland study are inappropriately applied to all 16 counties in the SFWMD – a very different housing market and environmental landscape.

Assumptions on water quality improvements cannot be supported. The Foundation’s Report assumes water quality would immediately improve by 23.4 percent for the entire water-system in all SFWMD 16 counties, even though the Restoration Plan will have very limited water quality benefits in only a few areas. Using more appropriate assumptions and methods would reduce the $16.1 billion benefit claimed by the Foundation by more than 80 percent.

Fiscal benefits stemming from “wildlife viewing” are based on a factual misrepresentation of previous work by the Fish and Wildlife Service and were not calculated using common and well-accepted economic methodologies for this type of study. A more likely estimation would be $275 million as opposed to the $12.5 billion claimed by the Foundation.

The Foundation uses an unreasonably low discount rate for calculating the present value of the future benefits they think will be achieved by Everglades restoration. The Foundation used a rate of 2.1 percent, based on the extremely low bond rates now in the market. However, the federal government, recognizing that the benefits will accrue over many decades, uses a 4.125 percent discount rate for water resource projects. This change alone would reduce the benefits claimed by the Foundation by 30 percent.

“It would have been prudent to have consulted with or employed a professional hydrogeologist familiar with conditions occurring in South Florida to ensure appropriate data was selected and interpreted to determine whether evidence of an increasing salinity trend actually exists such that future water supply would require desalination,” said Dr. Stout. “It also would have been appropriate to discuss existing operations and future plans with a variety of water supply utility directors throughout the District. This would have provided accurate, up-to-date information about their needs, concerns, and issues relating to water treatment practices and the relevance of Everglades Restoration to their operations.”

Additionally, the Foundation would have benefited from some meaningful interaction with the local water utilities in the areas directly affected by the CERP. The on-the-ground effect of CERP has been just the opposite of what was projected when it was put together. While the plan demonstrated it could meet environmental and water supply objectives, the act passed by Congress in 2000 approving the plan set up insurmountable policy and procedural issues that have made it impossible for utilities to obtain additional allocations, in spite of the detailed analysis performed by the Corps before they took the plan to Congress. As a result, CERP has been an obstacle to water supply growth and has resulted in significant additional costs rather than benefits to the utilities.

“While it may seem unlikely for a business advocacy group to be engaged on water supply and quality issues, the fact is AIF has a long history of working on water issues and has been a strong supporter of funding for alternative water projects. That’s why we sponsored the first Florida Water Forum last year along with the Florida Section of the American Water Works Association,” said Bishop. “We all need to work together to ensure an ample and healthy ‘water future,’ but we need to base our strategy for accomplishing this on solid science and not the questionable conclusions found in the Everglades Foundation’s report.”

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Known as “The Voice of Florida Business” in the Sunshine State, Associated Industries of Florida (AIF) has represented
the principles of prosperity and free enterprise before the three branches of state government since 1920. A voluntary
association of diversified businesses, AIF was created to foster an economic climate in Florida conducive to the growth,
development, and welfare of industry and business and the people of the state.